Competitive Balance Lottery to shake up Draft

There's enough information to digest from the new Basic Agreement to make Thanksgiving dinner seem like an appetizer. Getting a grasp on how the First-Year Player Draft and the international-signing landscape have changed takes time and patience.

The real ramifications of the changes laid out in the agreement may not truly be known until after baseball has gone through a Draft and a signing period under the new rules, and certainly not before the complete agreement is released. MLB.com has been collecting information to get a better understanding of this new way of doing business in the amateur ranks. This is part one in a series of stories to try to sort all of this out, so fans will have a sense of what their teams will be facing beginning with the 2012 Draft. The series will include an explanation of the Competitive Balance Lottery, how things will work in the international markets and a look at who will feel the greatest impact from these changes.

The Competitive Balance Lottery is new. The extra picks could come in handy in helping teams that supposedly need the most assistance to improve. Keep in mind, though, those teams won't get this aid until the 2013 Draft.

The first lottery will take place in July, after the 2012 Draft signing deadline has passed. The 10 smallest-market teams and the 10 lowest-revenue teams will be placed in the lottery to have a chance to win one of six extra picks in 2013. This doesn't mean there will be 20 teams in the lottery. There will be plenty of crossover, with the expectation of having 13 teams involved.

The teams that will be eligible for the first lottery are the D-backs, Orioles, Indians, Royals, A's, Pirates, Padres, Rays, Reds, Rockies, Marlins, Brewers and Cardinals.

The odds of winning a Draft pick in this lottery will be based on each team's winning percentage in the previous season. The half-dozen picks will be made at the conclusion of the first round, but after the compensation picks for free agents.

There will be a second group of six picks, coming after the conclusion of the second round. The teams from the first group that did not get one of the early picks will be re-entered, along with any other Major League team that receives any revenue sharing.

There's another wrinkle to this. These lottery picks can be traded. That's right, for the first time in Major League history, Draft picks can be dealt. But there are a series of conditions and limitations regarding such transactions.

Only a team that wins a pick in the lottery can trade it, meaning that selection can be traded just once. It can't be sold for cash, and it may only be dealt during the season. Trading can commence the day after the lottery is held and is allowed until the end of that regular season. So seeing a lottery pick or two involved in some July 31 Trade Deadline deals is a distinct possibility. They cannot be included in any Winter Meetings deals, however, with trading of picks again permitted at the beginning of the following regular season.

Teams eligible for '13 Lottery

Arizona D-backs

Baltimore Orioles

Cleveland Indians

Kansas City Royals

Oakland Athletics

Pittsburgh Pirates

San Diego Padres

Tampa Bay Rays

Cincinnati Reds

Colorado Rockies

Miami Marlins

Milwaukee Brewers

St. Louis Cardinals

The lottery, it seems, has been designed to help small-market and lowest-revenue clubs gain more talent not just because they had a poor season. Many of the smaller-market clubs were proponents of a system with hard slotting. While that hasn't happened, this current system is designed, with this lottery a part of it, to give those clubs a competitive advantage compared to the status quo.

There is one other lottery, one for picks forfeited by teams going over their allotted bonus pools. Any team going five to 10 percent over its pool gets taxed at 75 percent and loses a first-round pick. Anyone going 10-15 percent over gets hit with a 100-percent tax and loses a first- and second-round pick. Anything over 15 percent means a 100-percent tax and loss of first-round selections in the next two Drafts.

Any of those forfeited picks would go into a separate lottery. Any team that did not exceed its pool will be in that lottery. In this one, though, the odds are not just based on winning percentage, but on a formula of revenue and winning percentage.

Jonathan Mayo is a reporter for MLB.com and writes a blog, B3. Follow @JonathanMayoB3 on Twitter. This story was not subject to the approval of Major League Baseball or its clubs.